Casey: School chief: Scheme was TRS' idea

The final contract of retired school superintendent Rick Berry makes Pasadena Independent School District look like a piker when it comes to manipulating numbers to enhance pension benefits.

As reported this week, Pasadena gave Superintendent Rick Schneider a contract paying unused vacation time out as salary to the tune of about $46,000 over his past two years for the purpose of increasing his pension benefits. These benefits are based on the average of a retiree's highest three years of salary.

•$9,600 for auto allowance (which the superintendent received in addition to mileage).

•$1,200 for cell phone allowance.

A creative double dip

•$11,000 for 457(b) contribution. (This is similar to a 401(k) in the private sector. This was a clever double dip. The district not only put $11,000 into Berry's tax-deferred retirement account, but defined it as counting to increase his pension as well.)

•$55,080 for 54 days of unused vacation, paid at a rate of $1,020 a day.

The total of these items is $84,908, jumping Berry's "salary" from $255,000 to $339,908. Plugging that amount and Berry's 37 years of school work into the TRS formula means a $24,000 addition to his pension.

At his age of 59, that could total a lot of money. If Berry selected an option continuing the pension for his wife (a retired teacher) after his death, the annual amount would be somewhat lower, though the total might be higher.

A wayward counselor?

It was a great deal for Berry, and a great deal for the district. Berry received no raise his final year and also gave up nearly $18,000 in payments for unused sick days, said Cy-Fair trustee
Bill O'Brien
, who was president of the school board when the contract was arranged.

Since the $84,908 was money the district was obligated to pay anyway, its only cost was a modest contribution to TRS on the additional "salary."

There are only two problems.

One is that teachers, bus drivers and other lower-paid employees (to whom such creative schemes are not offered) together with taxpayers have to pick up the tab for what could be 20 or 30 years at $24,000 a year.

The other problem: State law and the TRS say none of the benefits listed above can be counted toward retirement.

So where did Berry get the idea to ask for this contract?

"I went in for a counseling session (with a TRS counselor) like everybody does when they are contemplating retirement," Berry said in a phone interview Friday. "This was back in January 2002.

"As we were going through my application, she brought up that there had been a change and that she could tell from my salary I was a superintendent."

The "change" appears to have referred to the dropping of TRS Rule 25.30, which required TRS to exclude items such as those listed above from retirement calculations.

Berry said the counselor suggested turning those benefits into pension benefits.

"I asked how it worked and she explained it to me," he said. "She said you could make your contribution based on that and it was salary. I checked it out by calling some people the next few days. I called the superintendent's association. They checked with TRS and got back the same answer, that it was correct."

Berry said he could not remember the name of the TRS counselor, but he "probably has it somewhere."

So with the help of his lawyer and the school district's lawyer from the firm of Bracewell & Patterson, the deal was struck.

But Berry says now the TRS is backing off. He said they called him a few days ago to tell him they were reviewing his contract.

"They are not going to count the accumulated vacation and they may not count any of the benefits," he said. He added that he has yet to receive his first pension check, though his retirement date was June 30.

A TRS spokesman said Friday that the agency "explains its laws, rules, and policies regarding creditable compensation in a manner that is consistent" with state law saying such benefits do not count toward one's pension.

"In order to determine what an individual counselor may have told an individual member, further investigation will be required," he said.

So what's the truth? Did a TRS counselor lead Berry and other superintendents down the primrose path? Or is this just another case of scheming lawyers and bureaucrats?

If I learn the answer I'll let you know.

Correction: Friday's column said if Pasadena Superintendent Schneider quit tomorrow he would receive the remainder of unused vacation that had been "converted to salary." He would not.

You can write to Rick Casey at P.O. Box 4260, Houston, TX 77210, or e-mail him at rick.casey@chron.com.